What is a proper disposition towards life? It is to accept God as a loving father, who is full of tenderness and forgiveness for us, despite our willful blunders and hardened hearts. He yearns for us, as a father and mother yearn for the return of their most beloved child. It is to accept that we are not lost, we are not abandoned. We are wandering like a wayward child, full of our own headstrong delusions. And our father waits expectantly, calling out for us through the darkness. Jesse, 2018
"There must be some way out of here
Said the joker to the thief
There's too much confusion
I can't get no relief
Businessmen, they drink my wine
Plowmen dig my earth
None of them along the line
Know what any of it is worth.
No reason to get excited
The thief, he kindly spoke
There are many here among us
Who feel that life is but a joke
But you and I, we've been through that
And this is not our fate
So let us not talk falsely now
The hour is getting late."
Bob Dylan, All Along the Watchtower
Today was the long awaited testimony of the Facebook CEO Mark Zuckerberg before the Congress.
I have to say it was tedious for the most part, and rather embarrassing here and there. I had to turn it off to watch old movies and documentaries.
I have some fellows who came rather late to clean the chimneys and fireplaces. And they are making such a racket with their vacuums that I can hardly hear anyway.
So I shall just post the charts and bid you a adieu until tomorrow.
"Fragility is the quality of things that are vulnerable to volatility."
Nassim Taleb
"Life is a school of probabilities."
Walter Bagehot
"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it."
Sir Eddie George, Bank of England, September 1999
Lately we have been seeing one day of a mad rally higher, followed the next day by a stunning reversal lower.
Today, they decided to break the mold and do both up and down moves of surprising breadth in the same day, in response to little or no new information.
Stocks were climbing higher from the start today, for no particular reason it appears, other than the desire to buy the dip. It was a fairly well-ordered but impressive move higher
But then about one o'clock today, the bulls seemed to lose their nerve, and the selloff began with the same quiet but relentless selling, taking stocks back down to nearly where the whole thing started.
Gold and silver caught a little bit of a bid, and managed to hang on to it despite the reversal in paper assets. The US Dollar did not fare as well, giving up its early and overnight gains to finish back below the 90 handle.
“We see that gold broke above its downtrend line. But now we see a massive base building in gold. Massive. It’s a five-year base in gold. If we break above this resistance line, one can expect gold to go up by, like a thousand dollars."
Jeff Gundlach
Late in the afternoon the news came out that the FBI had raided the offices of Michael Cohen, who is President Trump's personal lawyer. Yowza! That did not help the mood in the snake pits of Wall Street.
Brace for twitterstorm? Or for the firing of Rod Rosenstein who likely approved Mueller's FBI raid. And perhaps Jeff Sessions who ran for the hills at the first sign of trouble?
There are reports that Cohen is under a cloud for campaign fraud, wire fraud, campaign finance and election law violations. Trumpolini does not like to play defense, so let's watch for a reaction here that *could* move the markets further.
Don't know why, there's no sun up in the sky, Stormy Daniels.
It's never the crime, no matter how seemingly incidental— it's always the cover up.
Facebook's Zuckerberg will be answering questions before the US Congress tomorrow, in an extravaganza of self-righteous recriminations from the very people who have been letting him do as he pleased while taking his money in campaign contributions for many a year.
It may even be as harsh as the tongue-lashing that the esteemed Congress gave to the financial people after the crisis, before doing nothing much about it except bailing them out and guaranteeing their fortunes with public monies.
These markets are like a vehicle being driven by hard drinking, pipe-hitting, out of control chuckleheads who are not going to stop pushing things to the limit and tempting fate until they wrap themselves around a telephone pole.
If we were virtuously governed they would have been stopped long before now, as they have a certain number of unfortunate innocents in the backseat with them, and other pedestrians and passers-by who are likely to become collateral damage to their callow pursuit of selfishness and greed.
"There is no cause to worry. The high tide of prosperity will continue."
Andrew W. Mellon, Secretary of the Treasury, September 1929
"This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
R. W. McNeal, New York Herald Tribune, October 30, 1929
“If there was a day of the week I could skip it would be Monday. Clients had too much time to think and worry over a long weekend and by Monday they were often riddled with fear and anxiety.”
Stan Turner
“The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.”
John Kenneth Galbraith, The Great Crash of 1929
Stocks were able to nearly hold their ground with modest losses into the European close.
They were rattled by the rather poor Non-Farm Payrolls Report, but especially by the escalating war of words over trade between the US and China. Trumpolini could not resist answering the Chinese braggadocio about victory with another $100 Billion in tariffs.
About 1 PM the selling began to gain some momentum, and there was strong selling across a variety of companies that set some deeper lows. The Wall Street wiseguys love to hold the market up until Europe and Asia go home.
Despite the large and broader losses there was still little actual panic in the markets although Treasuries and gold did catch somewhat of a safe haven bid. Take a look at the modest increase in the VIX. Traders just do not believe that the market is going to go off the rails and are still looking to buy dips.
Right now the SP 500 futures are in a broad 'trading range' with energetic swings between 2580 up to around 2680. It may be noteworthy that it is around the 2580 level that the SP 500 had gone parabolic in the second leg of the Trump election rally.
There is a similar situation in the NDX futures, with the index vacillating broadly between 6400 to somewhere around 6650. Again it may be noteworthy that it was around 6400 that the index went parabolic in the post Trump election bull rally.
This is where it went from 'bull rally' to 'self-inflating bubble.'
I would suggest that the risk of a 'crash' is not great unless these lower bounds are broken, and panic selling sets in. Then we might see an NDX heading down to the old gap around 5460, with a similar target in the SP 500 of 2470. That would make for a solid market break and correction.
But, and this is the heart of the matter, there would need to be a decisive break lower out of this speculative range, accompanied by higher volumes and safe haven buying in Treasuries and gold.
For gold a panic breakout above 1370 would bring on 1400, which if broken would target 1470. And we of course would see a much higher spike in the VIX.
I do not think that a 'crash' is probable at this time unless 'something happens.' But we are in a rather unstable market, made so by the bubble facilitating and abetting actions of the usual suspects.
I came into today holding gold and triple short ETFs. I did take down those short trades in the last hour. As for gold, I remain persuaded by the charts that it is coiling for a breakout that may become memorable. It is pretty messy when a long running commodity price fixing pool falls apart.
The problem with stocks is that it is a market that has lost its bearings between real world values and prices driven by easy money and a willful mispricing of risk. No doubt this is the result of years of corruption and deceit across many levels and will not be fixed easily. This is because of the credibility trap, and the addiction to interventions and exceptions to justice introducing ever greater levels of moral hazard into the system.
Keep your heads down, don't be afraid to exercise your knees a bit in prayer, and remember what is truly important— those things that are most valued in God's economy, and not that of men.
Stocks managed to rise today for the third straight day, although on light volumes.
The new economic advisor Larry Kudlow helped the equity markets by bullishly announcing that the Trump tariffs are just 'proposals,' and that the US is not interested in a trade war. They merely want to engage China in meaningful negotiations about trade.
Let's see if China agrees that their own tariffs were just proposals. Or the US President himself for that matter. I hear that China has declared itself the winner in round one already.
The stock market action today looks very much like the continuation of the short squeeze from yesterday, led by the SP futures and various underperformers, if one looks at the stocks that were leading the indices higher.
The rally *could* continue if there were a rotation out of these heavily shorted stocks into the market leadership, either in the financials or the FANGs or both.
Gold was off today on a US Dollar rally up to the 90.485 level. Silver was up a bit.
Tomorrow there will be a non-Farm Payrolls Report for March. It *could* move the markets depending on how it compared to the forecasts and expectations. And this includes its ancillary components, especially wages.
Let us pray for those whose hearts are hardened against His grace and loving kindness by greed, fear, and pride, and the seductive illusion and crushing isolation of evil.
We pray that we all may experience the three great gifts of our Lord's suffering and triumph: repentance, forgiveness, and thankfulness. And in so doing, may we obtain abundant life, and with it the peace that surpasses all understanding.
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